Dow futures rise over 100 points, even as report shows inflation rising at fastest rate since 2008

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U.S. stock-index futures gained some altitude Thursday morning, as investors weighed a report providing further evidence that pricing pressures in America were accelerating at their fastest pace in years.

However, the big question is whether the rise in inflation is temporary or sustained, and market moves thus far are signaling that investors are inclined to belief that inflation will be relatively short-lived.

What are major benchmarks doing?
  • Futures on the Dow Jones Industrial Average YM00, +0.61% rose 118 points, or 0.3%, to 34,555.
  • S&P 500 futures ES00, +0.42% were up 5.15 points, or 0.1%, at 4,223.75.
  • Nasdaq-100 futures NQ00, +0.09% fell 29.75 points, or 0.2%, to 13,785.

On Wednesday, stocks ended slightly lower, with the Dow DJIA, +0.71% falling 152.68 points, or 0.4%, to close at 34,447.14. The S&P 500 SPX, +0.62% gave up a modest early gain that pushed the large-cap benchmark slightly above its previous record close of 4,232.60 set on May 7 to finish the day down 0.2%. The Nasdaq Composite COMP, +0.62% closed 0.1% lower.

What’s driving the market?

Stocks looked set to tilt higher early Thursday and shake off a report that showed that cost of living surged in May, driving the pace of inflation to a 13-year high of 5%, as the economy fully reopens from the COVID pandemic.

The rate of inflation over the past year escalated to 5% from 4.2% in the prior month. That put it at the highest level since 2008, when the cost of oil hit a record $150 a barrel. Before that the last time inflation was as high as it is now was in 1991.

The consumer-price index jumped 0.6% last month to mark the fourth increase in a row, the government said Thursday. Economists polled by Dow Jones and The Wall Street Journal had forecast a 0.5% advance.

Stocks have mostly been locked in narrow range near all-time highs, as investors try to gather more insight about the outlook for the economy in the aftermath of the public health crisis that hobbled the global economy for a year.

However, inflation worries appeared to be fading as measured by Thursday’s early morning moves. The yield on the 10-year Treasury note TMUBMUSD10Y, 1.505% on Wednesday fell to its lowest level since early March but was heading up Thursday at around 1.52%.

A hotter-than-expected jump in the April CPI briefly rattled markets last month, sparking concerns over the potential for runaway inflation and the possibility the Federal Reserve could move sooner than anticipated to slow its bond purchases.

A separate report on weekly initial jobless claims fell 9,000 to 376,000 in the week ended June 5, the Labor Department said Thursday, marking the lowest level of claims since March 2020. Economists surveyed by The Wall Street Journal had forecast new claims to fall to a seasonally adjusted 370,000.

Meanwhile, the ECB on Thursday offered few surprises, keeping interest rates unchanged and leaving the size of its asset-purchase programs unchanged, as expected. The ECB said it expected to continue to buy assets under its pandemic emergency purchase program, or PEPP, at a “significantly higher” pace than seen in the early months of this year.

Meme stocks were also in focus after GameStop Corp. GME, -7.91% late Wednesday disclosed that the Securities and Exchange Commission had asked for its cooperation with an investigation into the unprecedented volatility its stock has seen in recent months. It also suggested it isn’t the only one being probed.

Looking ahead, May U.S. federal budget figures are due at 2 p.m. Eastern.

See also: BANG stocks take a hit after GameStop discloses regulators on investigating

Which companies are in focus?
  • GameStop late Wednesday appointed two Inc. AMZN, +1.01% officials as its new top executives, shortly after private-equity investor Ryan Cohen was voted the company’s chairman of the board. The company also disclosed plans to sell more shares. The popular meme stock was down more than 5% in premarket trade.
  • Other meme stocks were under pressure in premarket action after GameStop’s disclosure of the SEC probe, with AMC Entertainment Holdings Inc. AMC, +2.01% down 3.1%; BlackBerry Ltd. BB, -1.18% down 1.7%; Koss Corp. KOSS, -3.76% down 1.2%; and Nokia Corp. NOK, -0.46% off 1.1%.
  • Shares of RH RH, +13.01% were up more than 6% after the retailer formerly known as Restoration Hardware topped earnings expectations again at the beginning of 2021, and lifted its forecast for the year.